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Dunedin sells equity stake in CitySprint in £175m Secondary MBO

By Dunedin,  February 18,2016

Reinvestment of growth capital for leading same day business

Dunedin, the mid-market private equity firm, announced today that it has sold its original shareholding in CitySprint - the UK’s leading same day distribution network, in a secondary MBO backed by LDC, valuing CitySprint at £175m. The deal sees Dunedin reinvesting into the business to retain an equity stake.

Dunedin originally invested £33.1m in CitySprint at the end of 2010 and has since worked alongside management to build the UK’s largest privately owned same day distribution network. 

With Dunedin’s support, CitySprint has made 21 acquisitions, creating an unrivalled nationwide network of 40 service centres and over 3,000 self-employed couriers, which can reach 88% of the UK in under one hour. CitySprint has also enjoyed five years of exceptional growth and turnover and EBITDA have more than doubled since Dunedin’s initial investment. In the year to 31 December 2015 CitySprint achieved EBITDA of £16.8m on turnover of £146m, up 14% on 2014 in which EBITDA was £13.5m and turnover was £129.0m.

CitySprint’s flexible and highly scalable model is underpinned by leading edge technology. Over the lifetime of Dunedin’s investment, CitySprint has invested significant CAPEX to support new service/product development and particular priority has been given to new enabling technology that enhances customer convenience. In June 2015, CitySprint launched “On the dot”, an innovative technology-enabled business-to-consumer service, offering customers specific one-hour delivery windows, which has attracted the attention of international retailers.

Dunedin is increasingly working with its investee companies to develop innovative technology that will enhance their levels of service and capability.

Nicol Fraser, Partner at Dunedin, commented: “Dunedin has worked closely with the management team to drive the rapid growth of CitySprint over the last five years. This has cemented CitySprint’s position as the UK market leader in same-day delivery. The business is now valued at £175m and great credit must go to the management team for all that they have achieved in just five years.”

Nicholas Hoare, Investment Director at Dunedin, who will remain on the CitySprint board, commented: “CitySprint is clearly differentiated in its market and we continue to see exciting opportunities for it to further increase its scale and capabilities. We have supported the company’s active acquisition strategy, as well as making significant investment in customer-focused technology that will continue to have a transformative effect on the business. For these reasons, we are delighted to be maintaining our relationship with the management team and to be reinvesting in the business.”

Patrick Gallagher, Chief Executive of CitySprint, commented: “In the last five years with Dunedin’s help we have created a point of clear differentiation that has enabled CitySprint to enhance its market leading position. We look forward to continuing that relationship with Dunedin and to working with our new investor LDC as we embark on the next stage of our journey. 

“Providing our customers with the best delivery service in the UK has always been the ultimate goal and we will be using fresh investment to find further ways to achieve this. Technology remains a key focus for us as we work to give our customers the control, convenience and simplicity that they expect in today’s on-demand, omnichannel culture.”

This exit closely follows Dunedin’s recent investment in Alpha Financial Markets Consulting, a leading global asset and wealth management consulting firm. The transaction was valued at £80m and announced in early February.

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